India not suitable country for low-cost airline ops: Report

New Delhi: India is not a suitable country for low-cost airline operations as it not only lacks infrastructure like low-cost secondary airports but also the cost of their staff is at par with full service carriers (FSC), a study has claimed.
Also, the LFCs have to face tough competition from Indian Railways and road transport for destinations of shorter durations.
"India has very few secondary airports from which the low fare carriers (LFCs) could operate. Of the 127 airports with the Airports Authority of India, only 80 are operational," aerospace expert Harmoz P Mama claimed in a study 'Civil Aviation in India : Challenges and Prospects'.
"The top five airports in India handle about 70 per cent of all domestic passenger traffic in India, which indicates poor airline coverage of most of the other airports."
The low fare airlines in order to save their staff -- particularly the pilots and engineers -- from being poached have to pay salaries on a par with those of FSCs, he said.
Apart from it, low-cost airlines also have to bear the brunt of the high price of Air Turbine Fuel (ATF), which actually is a high percentage of their total costs.
"The LFCs require higher standard of management capabilities than the FSCs as they have to operate on tissue-thin margins." They are compelled to appoint expatriate top management at a very high cost, Mama claimed.
The study found that more than 70 per cent of the costs of LFCs are about the same as those for FSCs, which include aircraft purchase and lease rental costs, maintenance repair and overhaul costs, fuel costs, all airport charges and also personnel salaries.
Also there are a number of LFCs fighting for a piece of cake by flying on the same sector. As a result, LFCs ended up cutting each other throats thus losing the opportunities to achieve economies of scale in a price sensitive market, he said.
28/12/08 PTI/Economic Times

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Categories: Indian Aviation- In General Dec 2008, Low Cost General Dec 2008